Stepan Company (SCL)
Working capital turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 2,306,120 | 2,759,510 | 2,339,460 | 1,863,540 | 1,847,220 |
| Total current assets | US$ in thousands | 851,883 | 1,044,800 | 913,368 | 905,651 | 818,789 |
| Total current liabilities | US$ in thousands | 607,870 | 670,649 | 500,476 | 416,554 | 339,114 |
| Working capital turnover | 9.45 | 7.38 | 5.67 | 3.81 | 3.85 |
December 31, 2023 calculation
Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $2,306,120K ÷ ($851,883K – $607,870K)
= 9.45
Stepan Co.'s working capital turnover has been exhibiting an upward trend over the past five years, indicating an improvement in the efficiency with which the company is utilizing its working capital to generate sales revenue. The ratio has increased from 3.87 in 2019 to 9.53 in 2023, reflecting a positive trend in the management of working capital.
A higher working capital turnover ratio signifies that the company is able to convert its working capital into sales at a faster rate. This could be attributed to effective inventory management, accounts receivable collection, and accounts payable management practices within the company.
The steady increase in the working capital turnover ratio suggests that Stepan Co. has been able to optimize its working capital resources more effectively over the years, leading to improved operational efficiency and potentially higher profitability. It indicates that the company is efficiently using its current assets to support its revenue-generating activities.
Overall, the rising trend in Stepan Co.'s working capital turnover ratio denotes a positive signal for the company's financial performance and operational effectiveness. It suggests that the company is efficiently managing its working capital to drive sales and achieve growth.
Peer comparison
Dec 31, 2023